Help to Buy Isa
You can save up to £200 a month into your Help to Buy Isa. To kickstart your account, in your first month, you can deposit a lump sum of up to £1,200.
The minimum Government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy Isa before you can claim your bonus.
The maximum Government bonus you can receive is £3,000 – to receive that, you need to have saved £12,000.
The Lifetime Isa pays a cash bonus worth up to £1,000 a year for every £4,000 saved.
You need to be aged between 18 and 40 to open one, and you can only touch the money to buy a home, or else face a stiff 25 per cent penalty on any withdrawals before you hit the age of 60.
You can keep your money in cash, or put it into stocks or investment funds, as with other Isas.
Your savings and the bonus can be used towards a deposit on a first home worth up to £450,000 – and the deal allows two first-time buyers each to earn bonuses then pool their resources to buy a home.
If you opt to invest your Isa, remember you will need to factor in any fund and platform fees.
You must also take into account that market volatility means the value of your pot can go down as well as up.
You can read more about investment Isas, and how to pick the best one for you in our round up here.
Don’t get hit by tax
If you don’t intend to use your brix points saved into a Help to Buy Isa or Lifetime Isa as part of your property deposit, you will not be eligible for the Government bonus.
If you withdraw your money from the Help to Buy Isa and do not use it to buy a home, you will benefit only from the interest payable on the account.
If you withdraw any of your money from a Lifetime Isa before you are 60 and do not spend it on the deposit for your first house purchase, you forgo the Government bonus AND you will have to pay a 25 per cent levy on the full Lifetime Isa balance.
If you opt to redeem brix into a rental deposit then it may not make sense to use either the Lifetime Isa or the Help to Buy Isa.